Question

what is the microeconomics concept or model that explains below behavior. explain.

1) company A, a competitor of B in the same market segment nevertheless supplies Company B with many of the components that B needs.

2) controversy in spain last year over the payment of a tax on the creation of mortgages. In response to popular pressure, the govt decreed that this tax be paid entirely by the bak from now on, and not by consumer. Banks did not push back against this policy change, despite many folks views that they have a strong case if they chose to fight the government decree in court

3) while country A has emerged as a world leader in the design and production of industrial robots, most of its production is sold internationally, with less than 1% purchased by manufacturing companies in the country A. In fact, robot statistics show a very low degree of automation of the manufacturing industry in country A: 0.0003 robots/worker, as opposed to 0.0085 worldwide, 0.02 in US or 0.03 in japan.

Answer 1

Monopolistic competition because It characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors. Monopolistic competition is closely related to the business strategy of brand differentiation.

• Monopolistic competition occurs when an industry has many firms offering products that are similar but not identical.
• Unlike a monopoly, these firms have little power to set curtail supply or raise prices to increase profits.
• Firms in monopolistic competition typically try to differentiate their product in order to achieve in order to capture above market returns.
• Heavy advertising and marketing is common among firms in monopolistic competition and some economists criticize this as wasteful.